Setting research agendas for productivity management … · Setting research agendas for productivity management in services ... manufacturing sector ... and based on Johnston and

International Journal for Quality

and Productivity Management, vol. 11, n. 1, 2014 Shafti

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Setting research agendas for productivity management in services

Farhard Shafti, Ph.D.1

ABSTRACT

This paper presents a novel perspective of service productivity management and proposes a number of

research agendas in this still evolving area of study. The paper is based on the views of top senior

managers in twelve service sectors. The interviews were analyzed using a number of methods, including

within-case and cross-case tables, coding and mapping. This qualitative analysis resulted in three main

findings. First, the „organizational background‟ of a service sector proves to have significant effect on the

approach to productivity management. Second, service sectors fall in different groups based on their

operational features in the context of productivity with each group showing specific operational features.

Finally, in some service operations there s eems to be l i t t l e o r no trade-offs between productivity

and quality. Each of the above topics brings their own insights into the area of service productivity

which lead to a number of research agendas. The proposed research topics will provide a new framework

for research into the difficult and often ignored subject of service productivity.

Keywords: Service, productivity, operations

Introduction

The aim of this research paper is to gain insights into the less explored area of service productivity by

interviewing senior executives in a variety of service sectors to discuss their views on productivity

management. The ethnographic approach of this project resulted in a number of interesting findings

regarding service productivity. These include a) documenting the shift of management focus from

quality to productivity in some service sectors and the reverse shift from productivity to quality in other

sectors, b ) identifying groups of service sectors with common operational and managerial features

related to productivity, and finally exploring factors that affect the relationship between productivity and

quality. Each of the above findings led to the development of new research agendas. The paper starts by

reviewing the relevant academic literature on service productivity and by the description of the research

methodology. The results of the work are then presented fol lowed by an in- depth discussion and

development of research topics for further investigation.

Research in Service Productivity

In this section the academic literature regarding productivity management in services is organized around

six general observations. A brief report of the relevant literature is given for each observation.

Observation one: “Research in service industries was initiated by the Marketing discipline. The

contributions of the Operations Management discipline started only later and focused

mostly on customer perspectives.”

1 University of Strathclyde, Glasgow, UK



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It is evident that the first major contributions in the area of service industries research were

provided by the Marketing discipline (Fisk et. al. 1993, 1995, Johnston 1999). In comparison, it appears

that the Operations Management discipline had created less momentum for the service movement at this

stage (Johnston 1999). Perhaps the earliest research works on service Operations Management are those

of Johnson et al. (1972) and Buffa (1976). The very fact that the discipline of Operations Management in

1970 was known as Production Management reveals the lack of attention to services (Johnston, 1999).

Between 1980 to 1985 significant attention to service research can be seen in the Marketing discipline (Fisk

et.al. 1995). According to Johnston (1999), at this stage the attention of Operations Management

continued to be on customer operations and service encounter:

“We (i.e. researchers in the area of operations management) seem to have been swept

along on the tide of interest in service focused predominantly from a customer perspective”

(Johnston 1999: 113)

Observation two: “The notion of productivity, with its different definitions, literally and conceptually, is

rooted in and originated from the old traditional manufacturing factories of the 18th

century”

The first time the word p r o d u c t i v i t y was used was in an article by Quesnay in 1766

(Sumath, 1984 and Edosomwan, 1987). Only more than a century later in 1883, according to Sumanth,

Littre defined productivity as the “faculty to produce”. In 1950, the organization for European Economic

Cooperation (OEEC) provided the following formal definition for productivity:

“Productivity is the quotient obtained by dividing output by one of the factors of

production. ….” (Sumanth, 1984: 3)

A number of gurus in the areas of economy, industrial management and socio-politics

never considered service activity to be something that could contribute to wealth and be considered

productive (Gronroos 1994, Jones 2005). Among them are Adam Smith, A. Marshall, Marx, and Lenin.

Adam Smith states in his famous book “The Wealth of Nations”:

“…Productive is all labour which fixes and realises itself in a particular subject or

vendible commodity. […] Unproductive is all labour which generally perish in the very

instant of their performance.” (Smith, 1776)

Old-time views about service contributions have of course been modified with the passing of an

industrial-based society, and it is now a generalized understanding that services do contribute to

wealth and can be more or less productive (Van Looy et al., 2003). In fact, in the past two decades, there

have been major debates about whether productivity of the service sector is growing slowly, and that what

might be the reasons behind this fact or perception (Gordon 1996, Wölfl 2003, Diewert 2005, Maroto-

Sanchez A. 2010).

Observation three: “The issue of productivity indices in the service sector is a controversial one: while

there is a strong belief that productivity in the service sector is low, there is an

opposing argument that the notion of „low productivity in the service sector‟ is only

a misunderstanding that is caused by the fundamental difference between services

and goods.”



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There are many references to the notion that productivity in the service sector is lower than in the

manufacturing sector (e.g., Lovelock and Young 1979, Millward 1990, Nachum 1999a and 199b,

Sherwood 1994, Van Biema and Greenwald 1997, Sheehy and Schone 2003, Murray 1987).

According to Gummesson (1993), this seems to be a commonly held opinion. However, a completely

different argument continues to be raised by many service operations researchers that places a serious

question mark on the commonly held opinion about low productivity in the service sector. For

example, Nucham (1999) argues that at least part of the disparity in productivity between services

and manufacturing is a statistical illusion resulting from the inadequacy of existing data and techniques of

measurement (Nucham 1999, p. 922). Blois (1984) argues that productivity measurement itself has

difficulties, and when it comes to service operations, these difficulties are be even more serious due to

the complexity of inputs and outputs in services. Gummesson (1993) blames traditional measures of

productivity for being „provider productivity‟ and „internally oriented‟ and thus not adequate for services,

which are essentially customer oriented. Nakajima (2007) looks at the retail service sector in Japan in

detail and concludes that the conventional measures of productivity are not helpful in retail services.

Observation four: "The single feature of service sector productivity that almost all the researchers in

the field agree upon, is its multi-dimensional and complex nature which makes it

fundamentally different from the traditional concept of productivity.”

The concerns about productivity in services among service operations researchers are so serious

and profound that some authors have even suggested using another term (servicity) to describe this

concept in services ( Jones and Hall, 1995). These authors single out Levitt‟s ( 1976) concept of

industrialization of services (product-line approach) as the most typical example of looking at service

productivity from a manufacturing point of view. Other authors suggest opening new paradigms in order

to better understand the concepts of service quality and service productivity (Gronroos 2004, Spohrer et al.

2007).

Adam and Gravesen (1996) report that at the end of the first international conference on service

productivity, Armistead characterized the field of service productivity as a mess. In summarizing their

analysis of the 26 papers presented in this conference, Adam and Gravesen note that the common

denominator in all these papers was the word „difficulty‟.

Observation five: “There are controversial discussions about the relationship between productivity

and quality in services with different views on the nature and dynamics of this

relationship. However, there seems to be a general agreement that a useful and relevant

study of productivity in a service operation should also take the notion of quality into

account.”

In almost all cases where researchers discuss their concerns about productivity in services, the

issue of the relationship between productivity and quality comes up. The range of discussions varies from

those who merely debate the relationship between the two as the two separate concepts, to those who

include the concept of quality (or some of the aspects of quality) in their definition of productivity.

A number of authors argue that productivity and quality cannot be dealt with separately in service

organizations (Djellal and Gallouj 2009, 2010, Parasuraman 2010).Gummesson (1998) argues that

productivity, quality and profitability are a triplet and separating them will make an unhappy family. He

later introduces three perspectives in organizations (called three “tribes”) that determine the relation

between these three concepts. Gummesson then proposes a model in which both the customer‟s and the

provider‟s contributions to productivity and quality are recognized as two sides of one concept, interacting



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among each other and both contributing to the service delivered. Similarly, Gronroos asserts that

productivity and perceived quality are inseparable phenomena, which he identifies as a dilemma in service

processes. Based on Ojasalo‟s work in 1999, Gronroos presents a model in which the inputs to the service

process comprise service provider and customer inputs, and the outputs consist of quantity and quality.

(Ojasalo 1999; Gronroos 2000, Gronroos and Ojasalo 2002, Ojasalo 2003).

A similar argument to those of Gummesson and Gronroos is put forward by Martin et al. (2001),

who discuss the notion of client (customer) productivity as an important part of the overall productivity of

the system. They point out that in services; the client has the roles of both co-producer and customer. In a

similar vein to Martin et al., Parasuraman (2002) develops a model in which a company‟s

perspective of productivity is linked to the customer's perspective of productivity.

Developing the Martin et al. notion of customer productivity, and based on Johnston and Clark‟s

(2001) model of customer and operational perspectives, Johnston and Jones (2004) also identify two

aspects of productivity: operational productivity (similar to what Parasuraman calls company‟s

perspective) and customer productivity (similar to what Parasuraman introduces as customer‟s

perspective). The authors then discuss the synergy as well as trade-offs between these two aspects of

productivity.

Observation six: Despite the interest in service productivity and the apparent need to improve productivity

in services, very little work has been done to improve our understanding and

measurement of productivity in this area, especially when one considers the vastness

and variety of service operations.

As presented above the area of service productivity has enjoyed a number of interesting and

thought-provoking contributions by many established and well-regarded researchers. This has not stopped

others from pointing out how little it has been done in the field in order to reach a consensus or at least

to provide an accepted framework for further research. Vuorinen et al. (1998) assert that the current

debate on service productivity is in its infancy and it is therefore essential to start from basics. Martin et

al. (2001) report that the attention to service productivity mainly concerns internal aspects of productivity

and has ignored the client‟s role, as similar concerns have been raised by Parasuraman (2002). Johnston

and Jones (2004) introduce the area as one that has much potential for development and assert that one of

their motivations in writing their assessment of state of affairs in this field paper is to encourage more

research.

Methodology

The aim of the present research project was to gain some insight into productivity management in

services and to propose a number of research agenda based on the findings. This was done by studying

common trends and possible differences among different service sectors, in terms of productivity

management. It was necessary to carry out the research project in a way that it could remain open ended

and willing take into account new ideas and responses that were not necessarily expected. Based on

the above, an inductive approach based on in-depth interviews with senior managers in a number of

different service sectors was deemed to be the appropriate approach to explore the problem in all its

richness and in reasonable detail (Baumard and Ibert, 2001, Creswell, 2007). To be able to compare a

reasonably wide range of services, twelve different service sectors were selected. Particular attention

was given to the selection of service sectors so that the clusters in some of the most cited service

classification models in academic literature would be covered (Chase1978, Silvestro et al. 1992,

Schmenner 2003). The selected service sectors were airlines (excluding no-frills a n d low-cost



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airlines), banks (retail operations only), management consultancy services, department stores, fast-food

restaurants, hotels (4-star rating only), life insurance services, legal services (small firms only), power

utilities (excluding electricity generating businesses), auto-repair services (highly-standardized operations

only), telecommunications businesses, and universities. Specification of some of the above service

sectors (as in brackets) was done upon the advice of senior managers in these services. This was done to

reduce the degree of variety within each sector, making it easier for senior managers to focus their

comments.

Two senior managers were contacted from each service sector with extensive experience of

working in more than one organization within that s ec t o r . The criteria were strictly applied in

choosing senior managers to e n s u r e information-rich cases and managers from whom one could

learn a great deal about issues of central importance to the purpose of the inquiry (Patton 2002).

The interviews were carried out on a semi-structured basis (Johns and Lee-Ross, 1988). A wide

range of aspects of productivity management in services were raised with each senior manager only to

serve as starting topics to keep the discussion on a consistent track across different interviews. These

included a) possible trade-offs between productivity and quality, b) obstacles in the way of productivity

improvement, c) factors that enhance productivity, and d) measurement problems. The senior managers

were asked to discuss each of the above topics and were given opportunity within the time constraints

to bring up any other important issues related to productivity in their respective service sector. The

interviews were all carried out face to face and on average each senior manager was interviewed for

about 3 hours. The interviews were recorded to make sure that no important information was missed

during the interview and that, if needed, the content of the interviews could be effectively revisited.

The framework proposed by Miles and Huberman (1994) was used as the basis for the analysis of

the interviews. In this framework, qualitative analysis consists of three related stages, namely data

reduction, data display, and conclusions and verification. In this framework, data reduction refers to the

process of selecting, focusing, simplifying, abstracting and transforming the data collected. The coding

process is the major part of data reduction. Data display consists of within-case displays and cross-case

displays. The general term „display‟ refers to an organized, compressed assembly of information that

permits conclusion-drawing and action (Miles and Huberman, 1994). Within-case display presents data

based on each of the studied cases, whilst cross-case display integrates the relevant parts of data across the

different cases and puts them into a single display unit. Conclusions and verification is the final stage of

analysis in which the results are summarized, structured, and verified. The first two stages of data analysis

are briefly described in this section and the third stage (conclusion and verification) is discussed in the

next section.

Data Reduction

The process of data reduction in this research consisted of four stages:

1. Transferring the data to hand written transcripts in the form of texts and using arrows to

illustrate logical relationships like „consists of‟, „causes‟, „comes after‟, etc. At this stage the

aim is to capture all that was said by senior managers and to eliminate any „noise‟ from data

(Kvale and Brinkmann 2008).

2. Integrating the relevant informative comments to form one „unit of data‟ (Kvale and Brinkmann,

2008). „Integrating‟ here means merely grouping a series of comments together, while „unit of

data‟ refers to „a string of phrases that are linked together by the interviewee and are about one

subject.

3. Allocating „descriptive‟ and „paternal‟ codes to the units of data. „Descriptive codes‟ are the

codes that can be designed at the early stage of data collection and their function is to separate



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the data into category, subject, source, condition and/or other descriptive information applicable

to data (Miles and Huberman, 1994). There is no element of interpretation in a descriptive code.

Unlike „descriptive codes, „paternal codes‟ have elements of interpretation. These codes can only

be identified and designed at the later stages of data collection and analysis when general trends of

data are starting to emerge (Miles and Huberman, 1994). At this point a browse through the

comments in units of data revealed that it was possible to categorize all comments into certain

number of groups in terms of the „plot‟, or the overall story, given for the subjects under

discussion. Based on this observation, a more specific review of the data was made, and as a result

specific codes were used to refer to these different „plots‟ in each unit of data. To explain the

coding process further, an example of the code for a comment made by a respondent in the hotel

industry is explained below. The data unit (comment) is:

There is a culture of being afraid to admit the mistakes, thus reporting and

communication are not good and failures and mistakes could be hidden.

The assigned code is: 643-HT-PRB-Cl-Pp-NGODT-2.

In the above code, NGODT is a paternal code pointing to the „plot‟ and the rest of the code is

descriptive. This code reveals that this is a comment about „Hotels‟ (indicated by HT) under the

top heading of „Productivity Improvement Problems‟ (indicated by PRB). The main subject

is about „Organizational Climate‟ (indicated by cl) and within this subject it relates to People

(indicated as Pp). The comment was made by the second expert in the hotel industry (indicated by

2). The paternal code (NGODT) indicates a „plot‟, in par ticular that the hotel industry i s

„not being good at‟ a certain aspect of the work which influences productivity.

4. Transferring the units of data to a software database. The units of data and their associated codes

were transferred to Microsoft Access to facilitate sorting, searching, and responding to enquiries

from the data.

Data Display

Within-case and cross-case displays were used to organize, compress and assemble the information in a

way that enabled conclusions to be drawn (Miles and Huberman, 1994, Silverman, 2000). Within- case

display was used to organize information about one service sector and general trends across the studied

service sectors were studied using cross-case displays. For within-case displays, tables were used to

summarize data for each broad subject within the eight productivity management aspects. Causal maps

were developed to demonstrate the links between concepts and issues, as described by the senior

managers. Appendices 1 and 2 provide a sample of a within-case table and a causal map for the data

related to airlines.

For developing cross-case displays, entries for identical subjects in the within-case tables were

compared and contrasted. Causal maps (Bryson et al, 2004) were used to explore reasons behind

differences and similarities. In parallel, the inquiries function in Microsoft Access was used to collect all

statements that included certain keywords in an attempt to derive themes or relationships. These were

keywords that had been used prominently by most of the senior managers and were regarded as

particularly influential (e.g., cost, standardization, customer, people, culture, change).

Analysis, Results and Findings

This section covers the last stage of the Miles and Huberman (1994) analysis framework, namely



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Conclusion and Verification. The outcomes of this qualitative analysis have been verified by continuous

double-checking of the analysis process to make sure information was located correctly and relevantly,

and also by revisiting the recorded tapes and notes throughout the analysis as well as referring back to the

sources of data for clarification. Three of the most interesting outcomes from the data analysis are

reported.

Productivity and organizational background

An interesting observation about productivity and quality was made by reviewing the reasons that

managers put an emphasis on either productivity or quality. A cross comparison of the within-case tables

and the causal maps related to this issue revealed an interesting trend among six of the studied services. It

seems that among these cases the organizations that were traditionally-built based on one of these

concepts have now begun to face challenges that force them to shift part of their focus to the other concept.

This is basically because of the new competition, regulations and economic conditions. For example,

senior managers in the insurance industry pointed out that “the industry is built on productivity”. The

pressure of regulations and competition mean that a significant focus is now being put on quality,

which requires changing the process-oriented mentality of the system and developing a quality culture

within those organizations. Similar comments were made by senior managers in the banking and fast-food

industries. On the other hand, senior managers in consultancy services referred to the fact that their sector

was traditionally based on quality and that in recent years, because of high competition and economic

pressure, the industry has started to put more focus on productivity, requiring a better balance between

front and back office. Similar comments were made by senior managers in the hotel and higher

education sectors. These findings are summarized in Figure 1.

FIGURE 1

Productivity and organizational background

Economic

pressure

Competition

pressure

Business built on quality

Traditional focus on quality

New productivity

related challenges

Economic

pressure

Business built on productivity

Traditional focus on quality

New productivity

related challenges

Competition

pressure



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Identifying the shift of focus from quality to productivity or from productivity to quality w i l l

help researchers to investigate which factors are leading particular firms in some service industries to shift

their focus in order to better compete. Although a shift in management focus was only prominently

reported in six of the twelve sectors, this is a significant trend that should inform future research.

Grouping the studied service sectors

Many classification models have been proposed for service operations (Cook 1999, Shafti et al. 2010).

Although, the objective of this research project was not about developing a classification model, the

qualitative analysis data suggests a clear distinction between groups of service sectors that may be used as a

basis for future classification of service operations. After developing the within-case tables for each

service sector, it was evident that different service sectors could be grouped into distinct clusters based on

their managerial and operational features related to productivity. These features were collected and put

into different groups by analyzing the within-case tables and u s i n g t h e inquiry facility in Microsoft

Access database. The p ro p o s e d title for each group represents the main operational environment

within which most of these services are operating. These distinct groups are as follows:

- Services in Factory Environment (Fast-Food)

- Services in Professional Environment (Legal and Consultancies)

- Services in Rapidly Changing Environment (Telecommunications, Utilities, Banks, Insurance)

The rest of the services in this study seemed to have a mixture of features associated with two or

the three of the above. For example,

University: Professional × Rapidly Changing Environments

Department Stores: Factory × Rapidly Changing Environments

Auto-Repair and Hotels: Factory × Professional Environments

Airlines: Factory × Professional × Rapidly Changing Environments

A summary of the features of each group is given in Table 1 . These features are taken from

the within-case tables and causal maps and are organized into two categories: Advantages and Challenges.

According to the senior managers, all these features are key factors that directly affect productivity

management in their respective service sectors. It should be noted that these are the dominant factors in

each group but that they may not apply equally in all service sectors, sub-sectors, or firms in the group.

Productivity and Quality trade-off

Understanding the trade-off between productivity and quality depends t o a g r e a t e x t e n t on

how o n e defines productivity. Gronroos (2000) argues that productivity improvement, by definition,

requires quality to remain constant. If one appreciate this, then as Hope (2007, p.3) puts it, “the

statement, „productivity increases affect the quality of service delivery”, is an oxymoron”. Parasuraman

(2010) concurs that a narrow definition of productivity is the main reason behind the perception of the

conflict between productivity and quality.



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TABLE 1

Operational features of the service sector groups

Groups Advantages Challenges

Factory

Environment

- Standardization

- Standard customer expectations

- Easy performance measurement

- Low appraisal and external

costs

- Human conflicts

- High prevention cost

- Less customer focus in

performance measurement

- Over-specialization

- Loyalty and motivation problems

Professional

Environment

- Low prevention and appraisal

costs

- Effective team working

- Good human relations between

back and front office

- High motivation of front line

- Not defined customer expectations

- Difficulties in measuring

intangibility

- Inflexibility and scarcity of senior

managers

- Low motivation of supporting

staff

- Balancing back and front office

Rapid Changing

Environment

- Technological advances

- Growth

- Easy to compete for the

newcomers

- Marketing gap

- Staff difficulty (morale, loyalty)

- High prevention cost

- Rapid change of customer

expectation

The productivity-quality trade-off (the title of this section) refers to whether, in the experience of

the managers interviewed, it is possible to keep service quality constant an d increase productivity, or

increase both quality levels and productivity indices at the same time. “At the same time” here, implies

that this work is not looking at the long term relationship of quality and productivity strategies

(Kontoghiorghes 2003); rather it is investigating the approaches to and the operational effects of trying to

improve both concepts at the same time. This was one of the main topics that were brought in the

interviews and the senior managers were asked to explain whether the above was possible in their

respective service sectors, and if yes, how and how easy it was to implement. The analysis of the

statements collected revealed a number of interesting insights.

Most of the senior managers suggested that in normal circumstances, it i s very difficult to

keep quality constant and increase productivity. Thus, the productivity-quality trade-off in services seems

to be a real issue in the minds of experience senior managers. While this was the general conclusion, in a

number of services some aspects of operations involved either a small or a negligible trade-off between

productivity and quality. This means that in these operational areas there are aspects of quality that can

easily be kept constant while increasing productivity. Moreover, respondents even asserted that in

particular operational areas it is possible to increase both quality and productivity a t t he s ame t ime .

The f a c t o r s behind such small or negligible trade-off in these operations were discussed at length

with the interviewees. These fall under one of the following three factors (see Figure 2):



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PR

OD

UC

TIV

ITY

QU

AL

ITY

FIGURE 2 Reducing trade-off between productivity and quality

Common Element

Customer as Co-producer

Isolated Sections

A. The focus on “common elements”

In some of the studied services, both productivity and quality affairs are partially or wholly focused on a

common element of the service offered. In such cases the trade-off between productivity and quality is

either small or zero. Examples of common elements in the studied services are:

- Speed (mainly for fast-food and partially for telecommunications in terms of processing

information)

- Standards (mainly for auto-repair and partially for power utility in terms of obtaining quality

accreditations)

- Defect-free product (partially for insurance and legal services)

„Speed‟ is seen as one of the aspects of quality in fast-food industry, nevertheless „speed‟ is also

normally considered as a productivity-friendly concept and a target that can be met by improving

productivity. Senior managers in the fast food industry considered this common element to be

applicable to both productivity and quality with almost no trade-off. Similar arguments were made for

other common elements such as “Standards” and “Defect-free Products” by the senior managers in various

industries.

The notion of common element between productivity and quality is very much in line with what is

referred in research on service productivity as “customer‟s perspective of productivity” (Gummesson,

1998; Parasuraman 2002; Johnston and Jones 2004; Martin et al. 2001). Based on the insights gained from

the collected data, common elements between productivity and quality appear to be the most effective

factor in reducing or eliminating the productivity-quality trade-off in service operations. Aside from this,

two more factors were found in the analysis of the qualitative data:

B. Where customer is a co-producer at a self-service point

Based on the responses from the interviewees, the service productivity-quality trade-off is reduced when

customers are co-producers at self-service point of the service delivery system (e.g., department stores,



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fast-food restaurants). A department store customer serves him/herself in the store by browsing through

the products and trying them on. Here the customer is contributing to a h i g h e r quality of

service without productivity being significantly affected. The same is true for customers in fast-food

restaurants. Actually, and according to the senior managers interviewed, self-service in fast-food outlets

increases productivity. This is clearly what is discussed by Lovelock and Young (1979).

C. Where productivity and quality efforts are isolated from each other

In some of the service sectors studied, each of quality and productivity are concerns of two

completely different parts of the system that provides the services, and these results in little or no

productivity-quality trade-off. Examples collected were in telecommunications (quality of the signal in

the field and productivity of the staff in the back office are separate), department stores ( in which

productivity is more of a concern in the back office, like inventory or accounting systems, while

quality is very much related to delivery, like courtesy and responsiveness of the sales people) and

universities where (quality is more important for research activities while productivity is more important

for teaching activities). In all the above examples, skills and energies can be divided and allocated

appropriately to achieve quality targets and productivity targets in different parts of the operations.

It is worth mentioning that in the most professional services the question of what is productivity,

the issue of productivity-quality trade-off, and how quality and productivity should be managed are not

very clear, and no practical insights were gained from the study. In the words of one of the senior

managers in consultancy services industry: “It's difficult to understand the concept of productivity in

this business. … Our mission is to deliver a high quality work; this is while we (i.e. the consultants of the

company) are merely interested in productivity”. The issue of productivity-quality trade-off certainly

needs special attention in the professional services sectors.

Future Research Agendas

Qualitative data was collected through in-depth interviews with twenty four senior managers in twelve

diverse service sectors. The explorative approach to the data resulted in a number of interesting

observations in different areas related to productivity management in services, namely the relationship

between the background of service sector and its current shift of focus between productivity and quality;

grouping the studied service sectors in terms of their managerial features in areas related to productivity;

and factors that can reduce trade-off between productivity and quality.

Viitamo (2008) argues that despite much discussion on service productivity, this area of research

is lacking adequate theoretical basis. When discussing the contribution of academia to research on service

productivity, Johnston and Jones refer to only a few recent works in their brief review of literature in this

area. Johnston and Jones point out how little empirical research has been done on the topic and encourage

more empirical research on the area by labelling it an area that is “ripe for development” (Johnston and

Jones, 2004; 201).

The research project described in this paper is an attempt to answer the above call by gaining

some insight into the complex area of service productivity management. The outcomes of this work raise a

number of interesting and important issues in service productivity, each worthy of further study. Three

main research agendas are described below.

1. The research outcomes show how a number of service sectors are shifting their focus between

productivity and quality. A number of factors were identified as the main forces behind the



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changes, namely competition, regulation and economic pressure. It would be informative to

investigate whether these are the only main factors that are influential in the shift of focus and

whether these are universal factors. It would also be interesting to see if it is possible to forecast

where each service sector will stand in the short- and long-term. The results of such research

can give managers insights into the fundamental forces behind the challenges they are facing

when managing productivity issues in their respective service organizations.

2. A number of the service sectors that were studied in this research project were divided into

three main groups, while others showed a combination of features from two or three groups. Is it

possible to generalize this grouping model by including other popular service sectors in the

recognized groups? How universal are the groups – in other words, what changes might occur in

the location of the same service sectors based in other countries? What are other possible

common managerial and operational features within each group? Should the “rapid changing

environment” be seen as a temporary environment that is going to stabilize once the rapid

change is completed or is “rapid change” a permanent feature of these service sectors? Is it

possible to recognize one or a limited number of variables that can be used as indicators or

factors that position a service sector into a particular group?

3. Trade-off between productivity and quality (with the particular meaning that was explained in

this paper) is a complex issue in service organizations. In studying the twelve service sectors

three main factors that can reduce the trade-off were identified. One of these factors, self-

service customers as co-producers, has previously been identified by Lovelock and Young

(1979). The other two factors are the notion of common element and the separation of the

productivity and quality efforts. Extended study is needed to investigate how applicable these

factors are in different service sectors and how exactly they affect the trade-off between

productivity and quality. Focusing on the notion of a common element, it is interesting to see

how the notion relates to the newly emphasized theory of “operational versus customer

productivity” (Johnston and Jones 2004).

The above are the main proposed research agendas in this paper. It is also interesting to investigate

possible links between the above three main outcomes of this project. Is it possible, for example, to argue

that services in a particular group in the proposed grouping model fit better with one or more of the three

factors that reduce trade-off between productivity and quality? Does the shifting focus of some services

affect their positioning in the proposed groups? How does this impact the applicability of common element

as a tool to reduce trade off (between productivity and quality) in these services?

Conclusion

When an area of study is complex and in need of fundamental research, initial analysis to provide some

insights into the field can help with setting directions for future research. The three research agendas

that were proposed and their possible links can provide an appropriate departure point for further

research in the field of service productivity.

This research work has advantage in being explorative and being based on the views of senior

managers with a diverse experience in their respective service sector. Such explorative methodology was

needed to gain insights into the complexity of service productivity and its link with quality on the basis

of the experience of those who deal with these issues on a daily basis. A deductive approach could not

provide such in-depth insight. The explorative nature of the work however does not allow generalizing



37

the findings of this study. As pointed out in the last section, each of the findings can benefit from further

research. A deductive approach with a statistically satisfactory sample size will be able to test how

generalizable some of the findings of this study are. Appropriate hypotheses can be formulated to

address some of the research questions that were raised in the last section. In such deductive study, it

will be interesting to add some specific types of services that were not included in this research. Some of

the most obvious ones are e-services, art & entertainment services and freelance services.

The literature on service productivity has not been growing in a considerable pace during the last

decade. In their systematic literature review paper on service productivity that covers the research

papers from 1989 to 2010, Lehmann and Koelling (2010) refer to only 9 post 2005 papers, out of which

only two are considered as notable contributions in the field. Recognizing and specifying relevant

research queries can help with expediting the process of research on service productivity. This research

work was designed to help with this endeavor. Collectively and individually, the proposed research

agendas in this paper can be seen as a think-tank for generating new research topics. Further, more

explorative research like this is needed to further contribute in directing and facilitating research in the

interesting yet mysterious subject of productivity in services.

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41

APPENDIX 1

Sample of a within-case table (airline industry)

Subject Statements from the respondents

Productivity and

quality trade-off

- Quality is more important in a healthy economy.

- In theory both should be together but because of the economic cycle there is a short term

trade off.

Policy with regard

to controlling cost,

quality and volume

- Volume and cost are important because of the application of yield management.

- Interaction between quality and cost is very complex.

Productivity Factors - Input includes people and technology like airplanes and is the dominant factor.

- Substituting different categories of input is very easy, interaction between people and

technology causes synergy effects.

- Output gets more sophisticated over a period of time because of wider range of services

and yield management.

- Process is complex and costly and consumes productivity benefits.

- Feedback is not very effective in increasing productivity as the procedures are routine

factory types.

Productivity Problems - Technology changes rapidly particularly in IT and causes all sorts of changes in

customer‟s experience.

- People are generally competent and loyal however in some airlines there are serious

problems with competence of people.

- Methodology and systems are amazingly good.

- There are no major problems with management and organizational culture.

Productivity

Improvement

- Different approaches are working together because of the complexity of getting all

operations in different levels to come together, in particular technology is very

important

- There are attempts to increase customer involvement particularly for peripheral services

Productivity

Measurement

Problems

- As costs decline with distance, measuring valid volume is an issue.

- Rules by which the costs are allocated to particular services are difficult.

- It is difficult to see if a route is profitable

- Measuring the output and its validity considering the intangibles is the most difficult one

in the list with respect to the softer aspects of productivity.

Quality Gaps - People have illusions about the advantages of flying

- Perception of customer about output that contains getting additional services like Taxi or

hotel is against productivity.

- External Communications are small and customers are not misled.

- Lots of stress is between the product development people and product delivering people.

- Multiple customer type makes it difficult to understand the customer's expectations.

Quality Costs - External costs are the largest without doubt because people remember faulty service and

talk about it.

Quality

Characteristics

- Most important ones are reliability, speed, willingness to help and ethics.

- Flexibility needs to be within limits, customer wants to control the situation.

Disagreements

between the

respondents

- None



42

APPENDIX 2

An extract from a causal map made for analyzing data related to Airlines

complexity of

processes

increased

revenue

growth

increasing volume

saturated market

focusing on cost

legislation issues

cost reduction technology particularly

yield management

difficult to see if a

certain route is

productive

arbitrary allocation of

cost in measurement

variety of categories of

cost and revenue

variety of output

difficulty of the rules

by which costs are

allocated to particular

services

Documents

Setting research agendas for productivity management … · Setting research agendas for productivity management in services ... manufacturing sector ... and based on Johnston and